REVIEW & OUTLOOK
Banana Republic Behavior, Cont.August 18, 2008
Last time we checked on Ecuador, the South American country was making itself notorious for a multibillion dollar legal shakedown of Chevron on bogus pollution charges. Now its President (and Hugo Chávez wannabe) Rafael Correa is lobbying the U.S. to renew Ecuador's preferential trade treatment, which is set to expire at the end of the year. What's Quichua for chutzpah?
We happen to support renewal of those preferences, granted under the 2002 Andean Trade Promotion and Drug Eradication Act. Ecuador is not (yet) Venezuela, and to the extent that trade preferences promote free-market political forces, so much the better. Then again, Mr. Correa's own behavior is the biggest political threat to those preferences. Since coming to power last year, Mr. Correa has threatened to default on Ecuador's debt, harassed the press, ejected numerous opposition leaders from congress, and rewritten the constitution to concentrate power in his hands.
Mr. Correa has also refused to renew a military basing agreement with the U.S. -- never mind that the U.S. soldiers there are involved in the kind of drug eradication that motivated the U.S. trade preferences in the first place. In March, the Colombian military raided a base run by the FARC in Ecuador and seized documents indicating close ties between the terrorist group and Mr. Correa's government, including FARC donations to his Presidential campaign. Mr. Correa dismissed the information, though Interpol has confirmed the documents as genuine.
Given his behavior, it's not surprising the country has the second-lowest rate of foreign direct investment in Latin America as a share of GDP, according to the Latin Business Chronicle. Mr. Correa seems to think a public relations campaign in the U.S. will ease his troubles here. He'd impress more Americans if he obeyed the law at home and abroad.